SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) December 10, 1997
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Charter)
State of Minnesota
(State or other Jurisdiction of Incorporation or
Organization)
333-5604 41-1848181
(Commission File Number) (I.R.S. Employer
Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On December 10, 1997, the Partnership purchased a 40%
interest in a newly constructed TGI Friday's restaurant in
Greensburg, Pennsylvania from Ohio Valley Bistros, Inc. The
total cash purchase price of the land and building was
approximately $1,650,000. The remaining interest is owned
by AEI Real Estate Fund XVII Limited Partnership, an
affiliate of the Partnership. Ohio Valley Bistros, Inc. is
not affiliated with the Partnership. The cash, used in
purchasing the property, was from the proceeds of the sale
of Limited Partnership Units.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. D
Not Applicable. Property was newly
constructed.
(b) A limited number of proforma adjustments are
required to illustrate the effects of the
transaction on the balance sheet and income
statement. The following narrative
description is furnished in lieu of the
proforma statements:
The Partnership commenced operations on May 1,
1997 when minimum subscriptions of 1,500
Limited Partnership Units ($1,500,000) were
accepted.
Assuming the Partnership had acquired the
property on May 1, 1997, the Partnership's
Investments in Real Estate would have
increased by $660,000 and its Current Assets
(cash) would have decreased by approximately
$660,000 at September 30, 1997.
The Total Income for the Partnership would
have increased from $49,053 to $77,241 for the
period ended September 30, 1997 if the
Partnership had owned the property during the
period.
Depreciation Expense would have increased by
$6,596 for the period ended September 30,
1997.
The net effect of these proforma adjustments
would have caused Net Loss to decrease from
$(43,468) to $(21,592), which would have
resulted in Net Loss of $(8.40) per Limited
Partnership Unit outstanding for the period
ended September 30, 1997.
(c) Exhibits
Exhibit 10.1 - Net Lease Agreement dated
December 10, 1997 between
the Partnership, and AEI Real
Estate Fund XVII Limited
Partnership and Ohio Valley
Bistros, Inc. relating to the
property at 1507, R.R. #6,
Greensburg, Pennsylvania.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
AEI INCOME & GROWTH FUND XXII
LIMITED PARTNERSHIP
By: AEI Fund Management XXI, Inc.
Its: Managing General Partner
Date: December 18, 1997 /s/ Mark E Larson
By: Mark E. Larson
Its Chief Financial Officer
(Principal Accounting and
Financial Officer)
NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the
10th day of December, 1997,by and between AEI INCOME &
GROWTH FUND XXII LIMITED PARTNERSHIP ("Fund XXII"), a
Minnesota limited partnership whose corporate general
partner is AEI Fund Management XXI, Inc., a Minnesota
corporation, and AEI REAL ESTATE FUND XVII LIMITED
PARTNERSHIP ("Fund XVII"), a Minnesota limited partnership,
whose corporate general partner is AEI Fund Management XVII,
Inc., both of whose address is 1300 Minnesota World Trade
Center, 30 East Seventh Street, St. Paul, Minnesota 55101
("Lessor"), and Ohio Valley Bistros, Inc., an Ohio
corporation ("Lessee"), whose address is 5803 Mariemont
Avenue, Cincinnati, Ohio 45227;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of
real property and improvements located at Greensburg,
Pennsylvania, and legally described in Exhibit "A", which is
attached hereto and incorporated herein by reference; and
WHEREAS, Lessee constructed the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor, and
sold the same to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter
referred to as the "Leased Premises"), from Lessor upon the
terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described
to be paid, kept, and performed by Lessee, Lessor does
hereby grant, demise, lease, and let unto Lessee, and Lessee
does hereby take and hire from Lessor and does hereby
covenant, promise, and agree as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and
takes from Lessor, the Leased Premises subject to the
conditions of this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen
(15) consecutive "Lease Years", as hereinafter defined,
commencing on the effective date hereof ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than
the first day of a calendar month, the first "Lease Year"
shall be the period from the Occupancy Date to
the end of the calendar month of the Occupancy Date, plus
the following twelve (l2) calendar months. Each Lease Year
after the first Lease Year shall be a successive period of
twelve (l2) calendar months.
(C) The parties agree that once the Occupancy Date has
been established, upon the request of either party, a short
form or memorandum of this Lease will be executed for
recording purposes. That short form or memorandum of this
Lease will set forth the actual occupancy and termination
dates of the Term and optional Renewal Terms, as defined in
Article 28 hereof, and the existence of any option to
purchase or right of first refusal, and that said option or
right shall terminate when the Lessee shall lose right to
possession or this Lease is terminated, whichever occurs
first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building has
been constructed on the Leased Premises, and all other
improvements to the land, including the parking lot,
approaches, and service areas, have been constructed in all
material respects by Lessee substantially in accordance with
the plot, plans, and specifications heretofore submitted to
Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land do comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full,
for all architectural fees and actual construction costs
relating to the Building and other related improvements on
the Leased Premises, in the past, present or future, which
shall include, but not be limited to, plans and
specifications, general construction, carpentry, electrical,
plumbing, heating, ventilating, air conditioning,
decorating, equipment installation, outside lighting,
curbing, landscaping, blacktopping, electrical sign hookup,
conduit and wiring from building, fencing, and parking
curbs, builder's risk insurance (naming Lessor, Lessee, and
contractor as co-insured), and all construction bonds and
permits for improvements made by or at the direction of
Lessee. Lessee agrees to obtain prior to the commencement
of future work a no-lien agreement in recordable form from
the contractor or contractors performing such work agreeing
to not place a lien upon the fee interest of Lessor in the
Leased Premises.
(D) Opening for business in the Leased Premises by
Lessee shall constitute an acceptance of the Leased Premises
and an acknowledgment by Lessee that the premises are in the
condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first Lease Year:
Lessee shall pay to Lessor an annual Base Rent of $169,125,
which amount shall be payable in advance on the first day of
each month in equal monthly installments of $5,637.50 to
Fund XXII and $8,456.25 to Fund XVII. If the first day of
the Lease Term is not the first day of a calendar month,
then the monthly Rent payable for that partial month shall
be a prorated portion of the equal monthly installment of
Base Rent.
(B) Annual Rent Payable for the Second Lease Year and
each Lease Year thereafter:
1. For the Second Lease Year, and each Lease Year
thereafter, the annual Base Rent due and payable shall
increase by an amount equal to One and 13/100 Percent
(1.13%) of the Base Rent payable for the immediately prior
Lease Year. Such increased Base Rent shall be payable in
advance of the first day of each month in equal monthly
installments.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of
Rent or other monetary amounts due hereunder at the rate of
eighteen percent (18%) per annum or the highest rate allowed
by law, whichever is less, accruing from the date such Rent
or other monetary amounts were properly due
and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal
Terms, if any, of this Lease, at its own cost and expense,
procure and maintain insurance which covers the Leased
Premises and improvements against fire, wind, and storm
damage (including flood insurance if the Leased Premises is
in a federally designated flood prone area) and such other
risks (including earthquake insurance, if the Leased
Premises is located in a federally designated earthquake
zone or in an ISO high risk earthquake zone) as may be
included in the broadest form of all risk, extended coverage
insurance as may, from time to time, be available in amounts
sufficient to prevent Lessor or Lessee from becoming a co-
insurer within the terms of the applicable policies. In any
event, the insurance shall not be less than one hundred
percent (100%) of the then insurable value, with such
commercially reasonable deductibles as Lessor may reasonably
require from time to time. Additionally, replacement cost
endorsements, inflation guard endorsements, vandalism
endorsement, malicious mischief endorsement, waiver of
subrogation endorsement, waiver of co-insurance or agreed
amount endorsement (if available), and Building Ordinance
Compliance endorsement and Rent loss endorsements (for a
period of one year) must be obtained.
(B) Lessee agrees to place and maintain throughout the
Term or Renewal Terms, if any, of this Lease, at Lessee's
own expense, public liability insurance with respect to
Lessee's use and occupancy of said premises, including "Dram
Shop" or liquor liability insurance, if the same shall be or
become available in the State of Pennsylvania, with initial
limits of at least $1,000,000 per occurrence/$3,000,000
general aggregate, or such additional amounts as Lessor
shall reasonably require from time to time.
(C) Lessee agrees to notify Lessor in writing if
Lessee is unable to procure all or some part of the
aforesaid insurance. In the event Lessee fails to provide
all insurance required under this Lease, Lessor shall have
the right, but not the obligation, to procure such insurance
on Lessee's behalf. Lessee will then, within three (3) days
from receiving written notice, pay Lessor the amount of the
premiums due or paid, together with interest thereon at the
lesser of 18% per annum or the highest rate allowable by
law, which amount shall be considered Rent payable by Lessee
in addition to the Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or
contemplated by this Article can be under Lessee's blanket
insurance coverage and shall name Lessor, Lessor's corporate
general partners, and Robert P. Johnson, as the individual
general partner of Lessor, and Lessee as additional named
insured and loss payee, as their respective interests (as
landlord and lessee, respectively) may appear, and shall
provide that the policies cannot be canceled, terminated,
changed, or modified without thirty (30) days written notice
to the parties. In addition, all of such policies
shall contain endorsements by the respective insurance
companies waiving all rights of subrogation, if any, against
Lessor. All insurance companies providing coverages must be
rated "A" or better by Best's Key Rating Guide (the most
current edition), or similar quality under a
successor guide if Best's Key Rating shall cease to be
published. Lessee shall provide Lessor with legible copies
of any and all policies and endorsements required herein on
or before the Occupancy Date. No less than fifteen (15)
business days prior to expiration of such policies, Lessee
shall provide Lessor with legible copies of any and all
renewal Certificates of Insurance, if the terms of the
Policies (including endorsements) have not changed, and
copies of such policies if the same have changed. Lessee
agrees that it will not settle any property insurance claims
affecting the Leased Premises in excess of $25,000 without
Lessor's prior written consent, such consent not to be
unreasonably withheld or delayed. Lessor shall consent to
any settlement of an insurance claim wherein Lessee shall
confirm in writing with evidence reasonably satisfactory to
Lessor that Lessee has sufficient funds available to
complete the rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any
orders, decrees or judgments which may be entered therein,
brought for damages or alleged damages resulting from any
injury to person or property or from loss of life sustained
in or about the Leased Premises, unless such damage or
injury results from the intentional misconduct or the gross
negligence of Lessor and Lessee agrees to save Lessor
harmless from, and indemnify Lessor against, any and all
injury, loss, or damage, of whatever nature, to any person
or property caused by, or resulting from any act, omission,
or negligence of Lessee or any employee or agent of Lessee.
In addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of
the extended coverage casualties, unless such fire or other
casualty shall be brought about by the intentional
misconduct or negligence of Lessor. In the event of any
loss, damage, or injury caused by the joint negligence or
willful misconduct of Lessor and Lessee, they shall be
liable therefor in accordance with their respective degrees
of fault.
(F) Lessor hereby waives any and all rights that it
may have to recover from Lessee damages for any loss
occurring to the Leased Premises by reason of any act or
omission of Lessee; provided, however, that this waiver is
limited to those losses for which Lessor is compensated by
its insurers, if the insurance required by this Lease is
maintained. Lessee hereby waives any and all right that it
may have to recover from Lessor damages for any loss
occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be
if the insurance required herein is maintained, compensated
by its insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the
charges for all public utility services rendered or
furnished to the Leased Premises, including heat, water,
gas, electricity, sewer, sewage treatment facilities and the
like, all personal property taxes, real estate taxes,
special assessments, and municipal or government charges,
general, ordinary and extraordinary, of every kind and
nature whatsoever, which may be levied, imposed, or assessed
against the Leased Premises, or upon any improvements thereon,
at any time after the Occupancy Date of this Lease for the
period prior to the expiration of the term hereof, or any
Renewal Term, if exercised.
(B) Lessee shall pay all real estate taxes,
assessments for public improvements or benefits, and other
governmental impositions, duties, and charges of every kind
and nature whatsoever which shall or may, during the term of
this Lease, be charged, laid, levied, assessed, or imposed
upon, or become a lien or liens upon the Leased Premises or
any part thereof. Such payments shall be considered as Rent
paid by Lessee in addition to the Rent defined at Article 4
hereof. If due to a change in the method of taxation, a
franchise tax, Rent tax, or income or profit tax shall be
levied against Lessor in substitution for or in lieu of any
tax which would otherwise constitute a real estate tax, such
tax shall be deemed a real estate tax for the purposes
herein and shall be paid by Lessee; otherwise Lessee shall
not be liable for any such tax levied against Lessor.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer
rents, and other governmental impositions, duties, and
charges which shall become payable for the first and last
tax years of the term hereof shall be apportioned pro rata
between Lessor and Lessee in accordance with the respective
number of months during which each party shall be in
possession of the Leased Premises (or through the expiration
of the term hereof, if longer) in said respective tax years.
Lessee shall pay within 60 days of the expiration of the
term hereof (or within thirty days of receipt of Lessor's
notice of such Lessor's reasonable estimate thereof,
whichever is later) reasonable estimate of Lessee's pro-rata
share of real estate taxes for the last tax year of the term
hereof, based upon the last available tax bill. Lessor shall
give Lessee notice of such estimated pro-rata real estate
taxes no later than 90 days before the end of the term hereof.
Upon receipt of the actual statement of real estate taxes for
such prorated period, Lessor shall either refund to Lessee
any over payment of the pro-rata Lessee obligation, or shall
assess and Lessee shall pay promptly upon notice any
remaining portion of the Lessee's pro-rata obligation for
such real estate taxes.
(D) Lessee shall have the right to contest or review
by legal proceedings or in such other manner as may be legal
(which, if instituted, shall be conducted solely at Lessee's
own expense) any tax, assessment for public improvements or
benefits, or other governmental imposition aforementioned,
upon condition that, before instituting such proceeding
Lessee shall pay (under protest) such tax or assessments
for public improvements or benefits, or other governmental
imposition, duties and charges aforementioned, unless such
payment would act as a bar to such contest or interfere
materially with the prosecution thereof and in such event
Lessee shall post with Lessor alternative security reasonably
satisfactory to Lessor. All such proceedings shall be begun
as soon as reasonably possible after the imposition or
assessment of any contested items and shall be prosecuted to
final adjudication with reasonable dispatch. In the event
of any reduction, cancellation, or discharge, Lessee shall
pay the amount that shall be finally levied or
assessed against the Leased Premises or adjudicated to be
due and payable, and, if there shall be any refund payable
by the governmental authority with respect thereto, if
Lessee has paid the expense of Lessor in such proceedings,
Lessee shall be entitled to receive and retain the refund,
subject, however, to apportionment as provided during the
first and last years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to
Lessee if Lessee fails to commence such proceedings, may,
but shall not be obligated to, contest or review by legal
proceedings, or in such other manner as may be legal, and at
Lessor's own expense, any tax, assessments for public
improvements and benefits, or other governmental imposition
aforementioned, which shall not be contested or reviewed, as
aforesaid, by Lessee, and unless Lessee shall promptly join
with Lessor in such contest or review, Lessor shall be
entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any
proceeding referred to in this Article, unless in Lessee's
reasonable opinion, the provisions of any law, rule, or
regulation at the time in effect shall require that such a
proceeding be brought by and/or in the name of Lessor, in
which event Lessor shall upon written request, join in such
proceedings or permit the same to be brought in its name,
all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies
Lessee in writing that Lessor has paid such amount, Lessee
shall also pay to Lessor, as additional Rent, the amount of
any sales tax, tax or fees charged on rent (exclusive of
income tax). At Lessor's option, Lessee shall deposit with
Lessor on the first day of each and every month during the
term hereof, an amount equal to one-twelfth (1/12) of any
estimated sales tax payable to the State in which the
property is situated for Rent received by Lessor hereunder
("Deposit"). From time to time out of such Deposit Lessor
will pay the sales tax to the State in which the property is
situated as required by law. In the event the Deposit on
hand shall not be sufficient to pay said tax when the same
shall become due from time to time, or the prior payments
shall be less than the current estimated monthly amounts,
then Lessee shall pay to Lessor on demand any amount
necessary to make up the deficiency. The excess of any such
Deposit shall be credited to subsequent payments to be made
for such items. If a default or an event of default shall
occur under the terms of this Lease, Lessor may, at its option,
without being required so to do, apply any Deposit on hand to
cure such default, in such order and manner as Lessor may elect.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-
BACK RIGHTS
(A) Except as otherwise expressly provided in this
Article, Lessee shall not, without obtaining the prior
written consent of Lessor, in each instance:
1. assign or otherwise transfer this Lease, or
any part of Lessee's right, title or interest therein;
2. sublet all or any part of the Leased Premises
or allow all or any part of the Leased Premises to be used
or occupied by any other Persons (herein defined as a Party
other than Lessee, be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise encumber this
Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any class of
capital stock of any corporate Lessee or sublessee, or the
transfer voting control of the total interest in any other
person which is a Lessee or sublessee, however accomplished,
whether in a single transaction or in a series of related or
unrelated transactions, shall be deemed an assignment of
this Lease, or of such sublease, as the case may be;
2. an agreement by any other Person, directly or
indirectly, to assume Lessee's obligations under this Lease
shall be deemed an assignment;
3. any Person to whom Lessee's interest under
this Lease passes by operation of law, or otherwise, shall
be bound by the provisions of this Article;
4. each material modification, amendment or
extension or any sublease to which Lessor has previously
consented shall be deemed a new sublease; and
5. Lessee shall present the signed consent to
such assignment and/or subletting from any guarantors of
this Lease, such consent to be in form and substance
reasonably satisfactory to Lessor.
Lessee agrees to furnish to Lessor within five (5)
business days following demand at any time such information
and assurances as Lessor may reasonably request that neither
Lessee, nor any previously permitted sublessee, has violated
the provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet
all or any portion of the Leased Premises without Lessor's
prior written approval, Lessee shall, prior to the effective
date thereof (the "Effective Date"), deliver to Lessor
executed counterparts of any such agreement and of all
ancillary agreements with the proposed assignee or
sublessee, as applicable. If Lessor in its sole discretion
(except as otherwise specifically limited herein) shall not
consent to a proposed sublease or assignment, Lessor shall
then have all of the following rights, any of which Lessor
may exercise by written notice to Lessee given within thirty
(30) days after Lessor receives the aforementioned documents:
1. with respect to a proposed assignment of this
Lease, the right to terminate this Lease on the Effective
Date as if it were the Expiration Date of this Lease;
2. with respect to a proposed subletting of the
entire Leased Premises, the right to terminate this Lease on
the Effective Date as if it were the Expiration Date; or
3. with respect to a proposed subletting of less
than the entire Leased Premises, the right to terminate this
Lease as to the portion of the Leased Premises affected by
such subletting on the Effective Date, as if it were the
Expiration Date, in which case Lessee shall promptly execute
and deliver to Lessor an appropriate modification of this
Lease in form satisfactory to Lessor in all respects.
4. with respect to a proposed subletting or
proposed assignment of this Lease, impose such conditions
upon Lessor's consent as Lessor shall determine in its sole
discretion.
(D) If Lessor exercises any of its options under
Article 7(C) above, (and if Lessor shall impose conditions
upon its consent and Lessee shall fail to meet any
conditions Lessor may impose upon its consent), Lessor may
then lease the Leased Premises or any portion thereof to
Lessee's proposed assignee or sublessee, as the case may be,
without liability whatsoever to Lessee.
(E) Notwithstanding anything above to the contrary,
Lessor agrees to consent to any assignment or sublease all
or any portion of the Lessee's interests herein to any
party, such consent not to be unreasonably withheld or
delayed, provided, however, in any event Lessor is given
prior written notice of such sublease or assignment,
accompanied by a copy of such sublease or assignment, and
the consents of Lessee (such consent to be in form and
substance satisfactory to Lessor) to such assignment or
sublet, affirming their continued liability hereunder.
Further, Lessor's consent shall be given if the proposed
assignment or sublease is to: (1) a franchisee in good
standing for the TGIFriday's concept, or (2) TGI Friday's,
Inc. (or its successor in interest) (Lessee's TGIFriday's
franchisor); or (3) a franchisee in good standing for a
restaurant concept then on Lessor or Lessor's affiliate's
current approved concept list; provided, however, in any
event Lessor is given prior written notice of such sublease
or assignment, accompanied by a copy of such sublease or
assignment, and the consents of Lessee (such consent to be
in form and substance satisfactory to Lessor) to such
assignment or sublet, affirming their continued liability
hereunder.
Provided, further, if Lessee shall assign (except in
cases occasioned by Lessee being in default hereunder and
such default being cured by TGI Friday's Inc.) its interest
hereunder to TGI Friday's, Inc. (or its successor in
interest), the undersigned will then be released for all
obligations of Lessee under the Lease accruing after the
date Lessor shall have approved in writing (such approval
not to be unreasonably withheld or delayed) the evidence of
satisfaction of the conditions to release stated above.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain
in good order, condition and repair the interior and
exterior of the Leased Premises during the term of the
Lease, or any renewal terms, and further agrees that Lessor
shall be under no obligation to make any repairs or
perform any maintenance to the Leased Premises. Lessee
covenants and agrees that it shall be responsible for all
repairs, alterations, replacements, or maintenance of,
including but without limitation to or of: The interior and
exterior portions of all doors; door checks and operators;
windows; plate glass; plumbing; water and sewage facilities;
fixtures; electrical equipment; interior walls; ceilings;
signs; roof; structure; interior building appliances and
similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee
hereunder, as itemized on Exhibit B attached hereto and
incorporated herein by reference; and further agrees to
replace any of said equipment when necessary. Lessee
further agrees to be responsible for, at its own expense,
snow removal, lawn maintenance, landscaping, maintenance of
the parking lot (including parking lines, seal coating, and
blacktop surfacing), and other similar items.
(B) If Lessee refuses or neglects to commence or
complete repairs promptly and adequately, Lessor may cause
such repairs to be made, but shall not be required to do so,
and Lessee shall pay the cost thereof to Lessor within five
(5) business days following demand. It is understood that
Lessee shall pay all expenses and maintenance and repair
during the term of this Lease. If Lessee is not then in
default hereunder, Lessee shall have the right to make
repairs and improvements to the Leased Premises without the
consent of Lessor if such repairs and improvements do not
exceed Seventy-Five Thousand Dollars ($75,000.00), provided
such repairs or improvements do not affect the structural
integrity of the Leased Premises. Any repairs or
improvements in excess of Seventy-Five Thousand Dollars
($75,000.00) or affecting the structural integrity of the
Leased Premises may be done only with the prior written
consent of Lessor, such consent not to be unreasonably
withheld or delayed. All alterations and additions to the
Leased Premises shall be made in accordance with all
applicable laws and shall remain for the benefit of
Lessor, except for Lessee's moveable trade fixtures. In the
event of making such alterations as herein provided, Lessee
further agrees to indemnify and save harmless Lessor from
all expense, liens, claims or damages to either persons or
property or the Leased Premises which may arise out of or
result from the undertaking or making of said repairs,
improvements, alterations or additions, or Lessee's failure
to make said repairs, improvements, alterations or
additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances,
rules, orders, regulations and requirements of all federal,
state, city and local governments, and with all rules,
orders and regulations of the applicable Board of Fire
Underwriters which affect the use of the improvements.
Lessee will comply with all easements, restrictions, and
covenants of record against or affecting the Leased Premises
and any franchise agreements required for operation of the
Leased Premises in accordance with Article 14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain a
sign or signs advertising Lessee's business, provided that
the signs conform to law, and further provided that the sign
or signs conform specifically to the written requirements of
the appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject
and subordinate this Lease at all times to the lien of any
mortgage or mortgages now or hereafter placed upon Lessor's
interest in the Leased Premises and on the land and
buildings of which said premises are a part, or upon any
buildings hereafter placed upon the land of which the Leased
Premises are a part, provided such mortgagee shall execute
its standard form, commercially reasonable subordination,
attornment and non-disturbance agreement. Lessor also
reserves the right and privilege to subject and subordinate
this Lease at all times to any and all advances to be made
under such mortgages, and all renewals, modifications,
extensions, consolidations, and replacements thereof,
provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement.
(B) Lessee covenants and agrees to execute and
deliver, upon demand, such further instrument or instruments
subordinating this Lease on the foregoing basis to the lien
of any such mortgage or mortgages as shall be reasonably
desired by Lessor and any proposed mortgagee or
proposed mortgagees.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by
any public authority under the power of eminent domain, or
by private purchase in lieu thereof (with "private purchase"
meaning a grantee which has the legal right of eminent
domain), then this Lease shall automatically terminate upon
the date possession is surrendered, and Rent shall be paid
up to that day. If any part of the Leased Premises shall be
so taken as to render the remainder thereof materially
unusable or unfit for the purposes for which the Leased
Premises were leased, in the opinion of an arbitrator
appointed by the American Arbitration Association office
closest to the site of the Leased Premises pursuant to its
rules and regulations and reasonably approved by Lessor and
Lessee (with both parties having a right to a hearing at
such office before said arbitrator), then Lessor and Lessee
shall each have the right to terminate this Lease on thirty
(30) days notice to the other given within ninety (90) days
after the date of such taking. In the event that this Lease
shall terminate or be terminated, the Rent shall, if and as
necessary, be paid up to the day that possession was
surrendered.
(B) If any part of the Leased Premises shall be so
taken such that it does not materially interfere with the
business of Lessee, then Lessee shall, with the use of the
condemnation proceeds (which Lessor agrees to make
available), but otherwise at Lessee's own cost and expense,
restore the remaining portion of the Leased Premises to the
extent necessary to render it reasonably suitable for the
purposes for which it was leased. Lessee shall make all
repairs to the building in which the Leased Premises is
located to the extent necessary to constitute the building
a complete architectural unit. Provided, however, that such
work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building
unless Lessee shall demonstrate to Lessor's reasonable
satisfaction the availability of funds to complete such work.
Provided, further, the cost thereof to Lessor shall not exceed
the proceeds of its condemnation award, all to be done without
any adjustments in Rent to be paid by Lessee. This lease shall
be deemed amended to reflect the taking in the legal description
of the Leased Premises.
(C) All compensation awarded or paid upon such total
or partial taking of the Leased Premises shall belong to and
be the property of Lessor without any participation by
Lessee, whether such damages shall be awarded as
compensation for diminution in value to the leasehold
or to the fee of the premises herein leased. Nothing
contained herein shall be construed to preclude Lessee from
prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage
to or loss of value or cost of removal of inventory,
trade fixtures, furniture, and other personal property
belonging to Lessee; provided, however, that no such claim
shall diminish or otherwise adversely affect Lessor's award
or the award of any fee mortgagee.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and
examine the Leased Premises at any time during business
hours, after reasonable notice to Lessee, and Lessee agrees
to allow Lessor free access to the Leased Premises to show
the premises. Upon default by Lessee, Lessee agrees to
allow Lessor to then place "For Sale" or "For Rent" signs on
the Leased Premises. Lessor and Lessor's representatives
shall at all times while upon or about the Leased Premises
observe and comply with Lessee's reasonable health and
safety rules, regulations, policies and procedures. Lessor
agrees to indemnify and hold Lessee, its successors,
assigns, agents and employees from and against any
liability, claims, demands, cause of action, suits and other
litigation or judgements of every kind and character,
including injury to or death of any person or persons, or
trespass to, or damage to, or loss or destruction of, any
property, whether real or personal, to the extent resulting
from the negligence or willful misconduct or Lessor or
Lessor's representatives while upon or about the Leased
Premises.
ARTICLE 14. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees
and warrants that the Leased Premises will be used
exclusively as an TGIFriday's Restaurant or other casual
dining sit-down restaurant. Lessee acknowledges and agrees
that any other use without the prior written consent of
Lessor will constitute a default under and a violation and
breach of this Lease. Lessee agrees: To open for business
on the first day in respect of which Rent is payable; to
operate all of the Leased Premises during the Term or
Renewal Terms during regular and customary hours for
businesses similar to the permitted exclusive use stated
herein, unless prevented from doing so by causes beyond
Lessee's control; and to conduct its business in a
professional and reputable manner.
(B) If the Leased Premises are not operated as an
TGIFriday's Restaurant or other casual dining sit-down
restaurant, or remain closed for thirty (30) consecutive
days (unless such closure results from reasons beyond
Lessee's reasonable control) and in the event Lessee fails
to pay Rent when due or fulfill any other obligation
hereunder, then Lessee shall be in default hereunder and
Lessor may, at its option, cancel this Lease by giving ten
(10) days prior written notice to Lessee or exercise any
other right or remedy that Lessor may have; provided,
however, that reasonable closings shall be permitted for
replacement of trade fixtures or during periods of repair
after destruction.
(C) In the event this Lease is terminated or canceled
pursuant to this Article, Lessee shall remain liable for the
payment of all Rents due to Lessor under this Lease for the
full remaining term in accordance with the applicable terms
and provisions of this Lease Agreement, offset by Rent
generated under a lease agreement with any new tenant.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises
are totally or partially destroyed by fire or other
elements, within a reasonable time (but in no event longer
than one hundred eighty (180) days and subject to the
provisions herein below), Lessee shall repair and restore
the Building so damaged or destroyed as nearly as may be
practical to their condition immediately prior to such
casualty. All rents payable by Lessee shall be abated
during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent
loss insurance required to be maintained by Lessee
hereunder.
Provided Lessee is not in default hereunder (and
retains according to the terms hereof the right to rebuild)
with the Lessor's prior written consent, which consent shall
not be unreasonably withheld or delayed, Lessee shall have
the right to promptly and in good faith settle and adjust
any claim under such insurance policies with the insurance
company or companies on the amounts to be paid upon the
loss. The insurance proceeds shall be used to reimburse
Lessee for the cost of rebuilding or restoration of the
Leased Premises. Risk that the insurance company shall be
insolvent or shall refuse to make insurance proceeds available
shall be with Lessee. The Leased Premises shall be so restored
or rebuilt so as to be of at least equal value and substantially
the same character as prior to such damage or destruction. If
the insurance proceeds are less than Fifty Thousand Dollars ($50,000),
they shall be paid to Lessee for such repair and restoration.
If the insurance proceeds are greater than or equal to Fifty
Thousand Dollars ($50,000), they shall be deposited by
Lessee and Lessor into a customary construction escrow at a
nationally recognized title insurance company, or at
Lessee's option, with Lessor ("Escrowee") and shall be made
available from time to time to Lessee for such repair and
restoration. Such proceeds shall be disbursed in conformity
with the terms and conditions of a commercially reasonable
construction loan agreement. Lessee shall, in either
instance, deliver to Lessor or Escrowee (as the case may be)
satisfactory evidence of the estimated cost of completion
together with such architect's certificates, waivers of
lien, contractor's sworn statements and other evidence of
cost and of payments as the Lessor or Escrowee may reasonably
require and approve. If the estimated cost of the work exceeds
One Hundred Thousand Dollars ($100,000), all plans and
specifications for such rebuilding or restoration shall be
subject to the reasonable approval of Lessor.
Any insurance proceeds remaining with Escrowee after
the completion of the repair or restoration shall be paid to
Lessor to reduce the sum of monies expended by Lessor to
acquire its interest in the Lease Premises and rent
hereunder shall be reduced by 10.25% of such amount.
If the proceeds from the insurance are insufficient,
after review of the bids for completion of such
improvements, or should become insufficient during the
course of construction, to pay for the total cost of repair
or restoration, Lessee shall, prior to commencement of work,
demonstrate to Escrowee and Lessor's reasonable
satisfaction, the availability of such funds necessary to
completion construction and Lessee shall deposit the same
with Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of
its value or such that Lessee cannot carry on business as a
casual dining restaurant without (in the opinion of an
arbitrator appointed by the American Arbitration
Association office closest to the site of the Leased
Premises pursuant to its rules and regulations and
reasonably approved by Lessor and Lessee (with both parties
having a right to a hearing at such office before said
arbitrator)) being closed for more than sixty (60) days
(which duration of closure may be established by Lessee by
the affidavit of a mutually approved registered independent
third party architect as to the estimated time of repair)
during the last two (2) years of the remaining term of this
Lease or any of the option terms of this Lease, if any
further options to renew remain, Lessee may elect within 30
working days of such damage, to then exercise at least one
(1) option to renew this Lease so that the remaining term of
the Lease is not less than five (5) years in order to be
entitled to such insurance proceeds for restoration or
rebuilding. Absent such election, this Lease shall
terminate upon Lessor's receipt of the insurance proceeds at
least equal to the estimated cost of such repair or
restoration, and if the Lease is so terminated, Lessee's
obligation for Rent hereunder shall cease upon Lessor's
receipt of the insurance proceeds.
ARTICLE 16. ACTS OF DEFAULT
(A) Each of the following shall be deemed a default by
Lessee and a breach of this Lease:
1. Failure to pay the Rent or any monetary
obligation herein reserved, or any part thereof when the
same shall be due and payable. Interest and late charges
for failure to pay Rent when due shall accrue from the first
date such Rent was due and payable; provided, however,
Lessee shall have five (5) days after written notice from
Lessor within which to cure the failure to pay the Rent or
any monetary obligation herein reserved.
2. Failure to do, observe, keep and perform any
of the other terms, covenants, conditions, agreements and
provisions in this Lease to be done, observed, kept and
performed by Lessee; provided, however, that Lessee shall
have Thirty (30) days after written notice from Lessor
within which to cure such default, or such longer time as
may be reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if Lessee is
diligently pursuing a course of conduct that in Lessor's
reasonable opinion is capable of curing such default, but in
any event such longer time shall not exceed 120 days after
written notice from Lessor of the default hereunder.
3. The abandonment of the premises by Lessee, the
adjudication of Lessee as a bankrupt, the making by Lessee
of a general assignment for the benefit of creditors, the
taking by Lessee of the benefit of any insolvency act or
law, the appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment of a
temporary receiver which is not vacated or set aside within
sixty (60) days from the date of such appointment; provided,
however, that the foregoing shall not constitute events of
default so long as Lessee continues to otherwise satisfy its
obligations (including but not limited to the payment of
Rent) hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at
any time thereafter, Lessor may serve a written notice upon
Lessee that Lessor elects to terminate this Lease. This
Lease shall then terminate on the date so specified as if
that date had been originally fixed as the expiration date
of the term herein granted, provided, however, that Lessee
shall have continuing liability for future rents for the
remainder of the original term and any exercised renewal
term as set forth in Article 19, notwithstanding any earlier
termination of the Lease hereunder (except where Lessee has
exercised a right to terminate where granted herein),
preserving unto Lessor the benefit of its bargained-for
rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or
otherwise, or in the event of an uncured default hereunder
by Lessee, or in the event that the premises or any part
thereof, shall be abandoned by Lessee and Rent shall not be
paid or other obligations (including but not limited to
repair and maintenance obligations) of Lessee hereunder
shall not be met, then Lessor or its agents, servants or
representatives, may immediately or at any time thereafter,
re-enter and resume possession of the premises or any part
thereof, and remove all persons and property therefrom,
either by summary dispossess proceedings or by a suitable
action or proceeding at law, or by force or otherwise
without being liable for any damages therefor, except for
damages resulting from Lessor's negligence or willful
misconduct.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in
this Lease or should it take possession pursuant to legal
proceedings or pursuant to any notice provided for by law,
it may either (I) terminate this Lease or (ii) it may from
time to time, without terminating the contractual
obligation of Lessee to pay Rent under this Lease, in
fulfilling Lessor's obligation, if any shall be required by
law, to mitigate Lessee's damages, make such alterations and
repairs as may be necessary to relet the Leased Premises or
any part thereof for the remainder of the original Term or
any exercised Renewal Terms, at such Rent or Rents, and upon
such other terms and conditions as Lessor in its sole discretion
may deem advisable. Termination of Lessee's right to possession
by Court Order shall be sufficient evidence of the termination
of Lessee's possessory rights under this Lease, and the filing
of such an Order shall be notice of the termination of Lessee's
Option to Purchase as set forth in any Memorandum of Lease of
record.
(B) Upon each such reletting, without termination of
the contractual obligation of Lessee to pay Rent under this
Lease, all Rents received by Lessor shall be applied as
follows:
1. First, to the payment of any indebtedness
other than Rent due hereunder from Lessee to Lessor;
2. Second, to the payment of any costs and
expenses of such reletting, including brokerage fees and
attorney's fees and of costs of such alterations and
repairs;
3. Third, to the payment of Rent and other
monetary obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be held by
Lessor and applied in payment of future Rent as the same may
become due and payable hereunder.
If such Rents received from such reletting during any month
are less than that to be paid during that month by Lessee
hereunder, Lessee shall pay any such deficiency to Lessor.
Such deficiency shall be calculated and paid monthly. No
such re-entry or taking possession of such Leased
Premises by Lessor shall be construed as an election on its
part to terminate Lessee's contractual obligations under
this Lease respecting the payment of rent and obligations
for the costs of repair and maintenance unless a written
notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to
terminate this Lease for any uncured breach.
(D) In addition to any other remedies Lessor may have
with this Article 19, Lessor may recover from Lessee all
damages it may incur by reason of any uncured breach,
including: The cost of recovering and reletting the Leased
Premises; reasonable attorney's fees; and, the present value
(discounted at a rate of 8% per annum) of the excess of the
amount of Rent and charges equivalent to Rent reserved in
this Lease for the remainder of the Term over the then
reasonable Rent value of the Leased Premises (or the actual
Rents receivable by Lessor, if relet) for the remainder of
the Term, all of which amounts shall be immediately due and
payable from Lessee to Lessor in full. In the event that
the Rent obtained from such alternative or substitute tenant
is more than the Rent which Lessee is obligated to pay under
this Lease, then such excess shall be paid to Lessor
provided that Lessor shall credit such excess against the
outstanding obligations of Lessee due pursuant hereto, if
any.
(E) It is the object and purpose of this Article 19
that Lessor shall be kept whole and shall suffer no damage
by way of non-payment of Rent or by way of diminution in
Rent incurred pursuant hereto. Lessee waives and will waive
all rights to trial by jury in any summary proceedings or in
any action brought to recover Rent herein which may
hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of
re-entry it may have or any rights of redemption or rights
to redeem this Lease upon a termination of this Lease.
Lessee expressly waives to the Lessor the benefits of Act
No. 20, approved April 6, 1951, as amended, entitled The
Landlord and Tenant Act of 1951, and agrees to give quiet
possession without further notice (except such notice as may
be otherwise required in this Net Lease Agreement) at the
end of the term, or upon default in the payment of any
installment of rent or other event of default hereunder.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and
building equipment used in connection with the operation of
the Leased Premises including, but not limited to, heating,
electrical wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment owned by Lessor and leased to
Lessee hereunder as specifically set forth on Exhibit B
attached hereto and incorporated herein by reference shall
be the property of Lessor. All other trade fixtures and
all other articles of personal property owned by Lessee
shall remain the property of Lessee.
(B) Lessee shall furnish and pay for any and all
equipment, furniture, trade fixtures, and signs, except for
such items, if any, described in Article 20(A) above, as
owned by Lessor. Lessee agrees that Lessor shall have a
lien on all Lessee's equipment, furniture, trade fixtures,
furnishings, and signs as security for the performance of
and compliance with this Lease, subject to the rights of any
bona fide third party's security interest in such property.
Provided Lessee is not in default hereunder, Lessor agrees
that its interest in the personal property of Lessee will be
subordinated to financing which may exist or which Lessee
may cause to exist in the future on that same personal
property.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to
Lessor given at least ten (10) days prior thereto, may be
removed from the Leased Premises by Lessee regardless of
whether or not such property is attached to the Leased
Premises so as to constitute a "fixture" within the meaning
of the law; however, all damages and repairs to the Leased
Premises which may be caused by the removal of such property
shall be paid for by Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done
whereby the Leased Premises may be encumbered by any
mechanic's or other liens. Whenever and as often as any
mechanic's or other lien is filed against said Leased
Premises purporting to be for labor or materials furnished
or to be furnished to Lessee, Lessee shall remove the lien
of record by payment or by bonding with a surety company
authorized to do business in the state in which the property
is located, within sixty (60) days from the date of the
filing of said mechanic's or other lien and delivery of
notice thereof to Lessee, or prior to foreclosure of the
same, if earlier. Should Lessee fail to take the foregoing
steps within said sixty 60) day period (or in any event,
prior to the expiration of the time within which Lessee may
bond over such lien to remove it as a lien upon the Leased
Premises), Lessor shall have the right, among other things,
to pay said lien without inquiring into the validity
thereof, and Lessee shall forthwith reimburse Lessor for the
total expense incurred by it in discharging said lien as
additional Rent hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased
Premises or termination of this Lease shall be valid unless
in writing signed by Lessor. The delivery of keys to any
employee of Lessor or Lessor's agents shall not operate as a
termination of the Lease or a surrender of the Leased
Premises. The failure of Lessor to seek redress for
violation of any rule or regulation, shall not prevent a
subsequent act, which would have originally constituted a
violation, from having all the force and effect of an
original violation. Neither payment by Lessee or receipt
by Lessor of a lesser amount than the Rent herein stipulated
shall be deemed to be other than on account of the earliest
stipulated Rent. Nor shall any endorsement or statement on
any check nor any letter accompanying any check or payment
as Rent be deemed an accord and satisfaction. Lessor may
accept such check or payment without prejudice to Lessor's
right to recover the balance of such Rent or pursue any other
remedy provided in this Lease. This Lease contains the entire
agreement between the parties, and any executory agreement
hereafter made shall be ineffective to change it, modify it or
discharge it, in whole or in part, unless such executory
agreement is in writing and signed by the party against whom
enforcement of the change, modification or discharge is sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set
forth in Article 4 and all other sums herein reserved as
Rent and upon the due performance of all the terms,
covenants, conditions and agreements herein contained on
Lessee's part to be kept and performed, shall have, hold and
enjoy the Leased Premises free from molestation, eviction,
or disturbance by Lessor, or by any other person or persons
lawfully claiming the same, and that Lessor has good right
to make this Lease for the full term granted, including
renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable
costs, and actual attorneys' fees, including but not limited
to attorney's fees incurred at the trial level and in any
appellate or bankruptcy proceeding, and expenses that shall
be incurred by the prevailing party in enforcing the
covenants, conditions and terms of this Lease or defending
against an alleged breach, including the costs of reletting.
Such costs, attorneys fees, and expenses if incurred by
Lessor shall be considered as Rent as due and owing in
addition to any Rent defined in Article 4 hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not
less than ten (10) days prior request by the other party,
execute, acknowledge and deliver to the requesting party a
statement in writing, executed by an executive officer of
such party, certifying that: (a) this Lease is
unmodified (or if modified then disclosure of such
modification shall be made); (b) this Lease is in full force
and effect; (c) the date to which the Rent and other charges
have been paid; and (d) to the knowledge of the signer of
such certificate that the other party is not in default in
the performance of any covenant, agreement or condition
contained in this Lease, or if a default does exist,
specifying each such default of which the signer may have
knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by any
prospective purchaser or mortgagee of the Leased Premises or
any assignee of such mortgagee or a purchaser of the
leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within
ninety (90) days after the end of Lessee's fiscal year,
furnish its financial statements of the Lessee. The
financial statements shall be audited, at the Lessee's
expense, by an independent certified public accountant and
shall be prepared in conformity with generally accepted
accounting principles. For purposes of the foregoing, in
lieu of individual audited financial statements for Lessee,
audited financial statements for The Bistro Group inclusive
of supporting schedules for Lessee, in form and substance
substantially similar to those financial statements for The
Bistro Group for the fiscal year ended September 26, 1994
previously delivered to Lessor, shall be acceptable.
Additionally, during the term of the Lease, Lessee will
within Forty-five (45) days from the end of each quarter of
each fiscal year, furnish Lessor with Lessee's financial
statements and financial statements of the Leased Premises
for such quarter. Lessor shall have the right to require
such financial statements on a monthly basis. Said
quarterly (or monthly, if requested by Lessor) statements do
not need to be prepared by an independent certified public
accountant, but shall be certified as true
and correct by the chief financial officer or other
authorized appropriate officer of Lessee. The financial
statements shall include a balance sheet and related
statements of income, changes in cash funds, changes in
capital, and related notes to financial statements.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable
modifications of this Lease requested by any Mortgagee of
record from time to time provided such modifications are not
substantial and do not increase any of the Rents or
substantially modify any of the business elements of this
Lease, or impose further obligations of Lessee.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated
and if Lessee has complied with and performed all of the
covenants and conditions in this Lease, then Lessee shall
have the option to renew this Lease upon the same conditions
and covenants contained in this Lease for Two (2)
consecutive periods of Five (5) years each (singularly
"Renewal Term"). Rent during each year of the Renewal Term
shall increase by One and 13/100 Percent (1.13%) of the Rent
payable for the preceding Lease Year.
The first Renewal Term will commence on the day
following the date the original Term expires and successive
Renewal Terms would commence on the day of following the
last day of the then expiring Renewal Term. Except as
otherwise provided in Article 15 hereof, Lessee must give
one hundred twenty (120) days written notice to Lessor of
its intent to exercise this option prior to the expiration
of the original Term of this Lease or any Renewal Term, as
the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor by
certified mail. Notices to either party shall be addressed
to the person and address given on the first page hereof.
Lessor and Lessee may, from time to time, change these
addresses by notifying each other of this change in writing.
Notices of overdue Rent may be sent to Lessee by regular,
special delivery, or nationally recognized overnight mail.
(B) The terms, conditions and covenants contained in
this Lease and any riders and plans attached hereto shall
bind and inure to the benefit of Lessor and Lessee and their
respective successors, heirs, legal representatives, and
assigns.
(C) This Lease shall be governed by and construed
under the laws of the Commonwealth where the Leased Premises
are situate.
(D) In the event that any provision of this Lease
shall be held invalid or unenforceable, no other provisions
of this Lease shall be affected by such holding, and all of
the remaining provisions of this Lease shall continue in
full force and effect pursuant to the terms hereof.
(E) The Article captions are inserted only for
convenience and reference, and are not intended, in any way,
to define, limit, describe the scope, intent, and language
of this Lease or its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease
and without the execution of a new lease, it shall be deemed
to be occupying said premises as a tenant from month-to-
month, subject to all the conditions,
provisions, and obligations of this Lease insofar as the
same can be applicable to a month-to-month tenancy except
that the monthly installment of Rent shall increase by 25%
of the amount due on the last month prior to such
expiration.
(G) If any installment of Rent (whether lump sum,
monthly installments, or any other monetary amounts required
by this Lease to be paid by Lessee and deemed to constitute
Rent hereunder) shall not be paid when due, or non-monetary
default shall remain uncured after the expiration of any
applicable cure period, Lessor shall have the right to charge
Lessee a late charge of $250.00 per month for each month that
any amount of Rent installment remains unpaid or non-monetary
default shall go uncured. Said late charge shall commence after
such installment is due or non-monetary default goes uncured
after the expiration of any applicable cure period and continue
until said installment, interest and all accrued late charges are
paid in full or such non-monetary default is cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes
at any time, provided Lessee shall consent after prior
written notice, such consent not to be unreasonably withheld
or delayed, provided such easement does not interfere with
the business of Lessee. In such event Lessor shall, at its
own cost and expense, restore the remaining portion of the
Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was
leased, all to be done without adjustments
in Rent to be paid by Lessee. All proceeds from any
conveyance of an easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent"
shall be defined as Rent under Article 4, and any other
monetary amounts required by this Lease to be paid by
Lessee.
(J) Lessee agrees to cooperate with Lessor to allow
Lessor to obtain and use at Lessor's expense promotional
photographs of the Leased Premises, to the extent permitted
by Lessee's franchisor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained
herein it is the intent of the parties that the rights and
remedies contained herein shall not be exclusive but rather
shall be cumulative along with all of the rights and
remedies of the parties which they may have at law or
equity.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor,
its successors and assigns, (i) that it has not used or
permitted and will not use or permit the Leased Premises to
be used, whether directly or through contractors, agents or
tenants, and to the best of Lessee's knowledge and except as
disclosed to Lessor in writing, the Leased Premises has not
at any time been used for the generating, transporting,
treating, storage, manufacture, emission of, or disposal of
any dangerous, toxic or hazardous pollutants, chemicals,
wastes or substances as defined in the Federal Comprehensive
Environmental Response Compensation and Liability Act of
1980 ("CERCLA"), the Federal Resource Conservation and
Recovery Act of 1976 ("RCRA"), or any other federal, state
or local environmental laws, statutes, regulations,
requirements and ordinances ("Hazardous Materials"); (ii)
that there have been no investigations or reports involving
Lessee, or the Leased Premises by any governmental authority
which in any way pertain to Hazardous Materials (iii) that
to the best of Lessee's knowledge, the operation of the
Leased Premises has not violated and is not currently
violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv)
that the Leased Premises is not listed in the United States
Environmental Protection Agency's National Priorities List
of Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Materials or hazardous
waste sites, whether maintained by the United States
Government or any state or local agency; and (v) that
the Leased Premises will not contain any formaldehyde, urea
or asbestos, except as may have been disclosed in writing to
Lessor by Lessee at the time of execution and delivery of
this Lease. Lessee agrees to indemnify and reimburse
Lessor, its successors and assigns, for:
(a) any breach of these representations and
warranties, and
(b) any loss, damage, expense or cost arising out of
or incurred by Lessor which is the result of a breach of,
misstatement of or misrepresentation of the above covenants,
representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or incur
by reason of Hazardous Materials discovered on the Leased
Premises during the term hereof or placed or released on the
Leased Premises by Lessee;
together with all reasonable attorneys' fees, costs and
disbursements incurred in connection with the defense of any
action against Lessor arising out of the above. These
covenants, representations and warranties shall be deemed
continuing covenants, representations and
warranties for the benefit of Lessor, and any successors and
assigns of Lessor and shall survive expiration or sooner
termination of this Lease. The amount of all such
indemnified loss, damage, expense or cost, unpaid after
demand, shall bear interest thereon at the lesser of 18% per
annum or the highest rate of interest allowed by applicable
law of the Commonwealth of Pennsylvania and shall become
immediately due and payable in full on demand of Lessor, its
successors and assigns.
ARTICLE 32. ESCROWS
Upon a default by Lessee or upon the request of
Lessor's Mortgagee, if any, Lessee shall deposit with Lessor
on the first day of each and every month, an amount equal to
one-twelfth (1/12th) of the estimated annual real estate
taxes, assessments and insurance ("Charges") due on
the Leased Premises, or such higher amounts reasonably
determined by Lessor as necessary to accumulate such amounts
to enable Lessor to pay all charges due and owing at least
thirty (30) days prior to the date such amounts are due and
payable. From time to time out of such deposits Lessor
will, upon the presentation to Lessor by Lessee of the bills
therefor, pay the Charges or at Lessee's option, will upon
presentation of receipted bills therefor, reimburse Lessee
for such payments made by Lessee. In the event the deposits
on hand shall not be sufficient to pay all of the estimated
Charges when the same shall become due from time to time or
the prior payments shall be less than the currently estimated
monthly amounts, then Lessee shall pay to Lessor on demand
any amount necessary to make up the deficiency. The excess
of any such deposits shall be credited to subsequent
payments to be made for such items. If a default or an
event of default shall occur under the terms of this Lease,
Lessor may, at its option, without being required so to do,
apply any Deposit on hand to cure the default, in such order
and manner as Lessor may elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the
contrary it is the intent of the parties hereto that this
Lease shall be a net lease and that the Rent defined
pursuant to Article 4 should be a net Rent paid to Lessor.
Any and all other expenses including but not limited to,
maintenance, repair, insurance, taxes, and assessments,
shall be paid by Lessee.
ARTICLE 34. TGIFRIDAY'S FRANCHISE
The right of Lessee to operate a TGIFriday's
Restaurant on the Leased Premises arises pursuant to a
franchise agreement between Lessee and T.G.I. Friday's (or
its successor in interest) ("Franchisor") (the "Franchise
Agreement"). Lessee (and Lessee represents that T.G. I
Friday's also) expressly acknowledge and agree that the
Franchise Agreement has been disclosed to Lessor, but the
provisions of the Franchise Agreement shall have absolutely
no effect on this Lease. To provide certain assurances as
required by Franchisor, Lessee hereby agrees for the benefit
of Franchisor and further hereby unconditionally and
irrevocably authorizes Lessor to do each and all of the
following for and on behalf of Franchisor.
(A) Assignment of Lease to Franchisor. Lessor agrees
that Lessee may at any time after prior written notice to
Lessor (whether or not Lessee is in default under this
Lease) assign this Lease to Franchisor. If at any time of
any such assignment Lessee shall not be in default
hereunder, or, if Lessee shall be in default but such
default shall be timely cured within the cure periods herein
provided, without extension or delay occasioned by such
assignment, Lessor agrees that peaceful possession of the
Leased Premises by Franchisor shall not be disturbed and
this Lease shall not be terminated or affected by reason of
such assignment but shall continue in full force and effect
as a direct lease between Lessor and Franchisor (though the
original Lessee shall remain fully liable for the
obligations of Lessee hereunder) all upon the terms,
covenants, and conditions set forth in this Lease and in
that event, Franchisor shall attorn to and be bound by all
the terms and conditions of this Lease by written attornment
and assumption agreement in favor of Lessor and Lessor
agrees to accept such attornment and recognize Franchisor as
Lessee under this Lease.
(B) Notices to Franchisor; Franchisor's Concurrent
Option to Cure. Lessor will endeavor to give Franchisor
simultaneously with service to Lessee (but only where such
notice may be required hereunder) a duplicate of any and all
notices and demands given by Lessor to Lessee; provided,
however, that failure of Franchisor to receive such notices
shall not hinder or delay Lessor's right to proceed with any
or all remedies granted to Lessor herein as against Lessee.
No such notice to Lessee shall be effective as against
Franchisor unless a copy is so given to Franchisor at the
Franchisor's last known (to Lessor) address in the same
manner as notices must be given as set forth with Article 29
hereof.
In the event of a default by Lessee hereunder,
Franchisor shall have the same right concurrent with Lessee
to perform any of Lessee's covenants or obligations or of
curing any default by Lessee, and upon written notice to
Lessor of the same within 5 business days after such cure by
Franchisor, assume Lessee's position as lessee (subject to
any liens, pledges, or encumbrances on such interest, if
any) under this Lease. In the event Franchisor elects to
assume this Lease due to Franchisor's cure of a default by
Lessee, Lessee shall be deemed to have automatically
assigned this Lease (though remaining liable for Lessee's
obligations hereunder) to Franchisor.
Lessor agrees (to the extent known to Lessor) to
give Franchisor prior written notice of any assignment or
sublet of Lessee's interest hereunder, or any material
amendment of this Lease prior to Lessor's consent to the
same, if Lessor's consent thereto is required hereunder.
(C) Right to Remove TGIFriday's Identity Within ten
(10) business days after termination or expiration of this
Lease, Franchisor shall have the right, after prior written
notice to Lessor and the making of mutually satisfactory
arrangements respecting the nature and repair of the Leased
Premises as a result thereof, to make at its own cost and
expense, non-structural modifications or alterations to the
Leased Premises as may be necessary to distinguish the
appearance of the Leased Premises as may be necessary to
distinguish the appearance of the Leased Premises from that
of an TGIFriday's Restaurant, and shall have the right to
make such specific additional changes thereto as Franchisor
may reasonably request for that purpose. Such modifications
or changes shall include, but may not be limited to:
1. Removal of decorative memorabilia, including all
wall hangings and pictures;
2. Removal of all TGIFriday's signage and material
containing proprietary marks and symbols;
3. Repaint exterior walls; and
4. Removal of all items, such as menus, recipes, or
any other items bearing Franchisor's Proprietary marks.
IN WITNESS WHEREOF, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first
above written.
LESSEE: OHIO VALLEY BISTROS, INC.
Attest:
/s/ Donna G Davis
Treasurer By:/s/ James S Cox
Its:President
STATE OF )
)SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this
8th day of December, 1997, behalf of said corporation.
Notary Public
/s/ Ruby D Thompson
[notary seal]
LESSOR: AEI REAL ESTATE FUND XVII LIMITED
PARTNERSHIP, a Minnesota limited
partnership
By: AEI FUND MANAGEMENT XVII, INC., a
Minnesota corporation
Attest:
/s/ Mark E Larson By: /s/ Robert P Johsnon
Mark E Larson, Secretary Robert P. Johnson, President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the
9th day of December, 1997, by Robert P. Johnson, the
President of AEI Fund Management XVII, Inc., a Minnesota
corporation, corporate general partner of AEI Real Estate
Fund XVII Limited Partnership, on behalf of said limited
partnership.
/s/ Michael B Daugherty
Notary Public
[notary seal]
LESSOR: AEI INCOME & GROWTH FUND XXII
LIMITED PARTNERSHIP, a
Minnesota limited partnership
By: AEI FUND MANAGEMENT XXII, INC., a
Minnesota corporation
Attest:
/s/ Mark E Larson By: /s/ Robert P Johsnon
Mark E Larson, Secretary Robert P. Johnson, President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the
9th day of December, 1997, by Robert P. Johnson, the
President of AEI Fund Management XXI, Inc., a Minnesota
corporation, corporate general partner of AEI Income &
Growth Fund XXII Limited Partnership, on behalf of
said limited partnership.
/s/ Michael B Daugherty
Notary Public
[notary seal]
Exhibit A
All that certain lot or piece of ground situate in the
Township of Hempfield, County of Westmoreland and
Commonwealth of Pennsylvania, being all of Lot No. 2 the
Revised Hempfield Square Plan of Lots of record in Plan Book
Volume 91, page 313.
Together with and under subject to a Reciprocal Easement and
Use Restriction Agreement dated May 5, 1997 and recorded in
Deed Book Volume 3491, page 299 by and among Gustine
Hempfield Associates, Ltd. et al. and Mountain Top
Associates.
Being designated as Tax Parcel 50-14-00-0-235 in the Tax
Assessment Office of Westmoreland County, Pennsylvania.
